ECB

Damned if they do, damned if they don’t – Making the Big Bad Bankers Cry

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After reading many articles and opinions, from all over the world, both for and against the new Greek government I’ve concluded that this is not simply some Greek drama. What happens in Greece, in the coming weeks and months, will shape things to come for the rest of our planet, for the next fifty years or more. The stakes are very high and what may have started out as Greek mythology in the minds of European bankers and those who support rule by iron fist of finance may very well end up a cold dose of reality for everyone involved. Whatever happens, Syriza has made it clear – Greece will not go down quietly, without making the big bad bankers cry.

“Everybody knows we are insolvent. What is the point of us borrowing another €7bn to pay back the ECB – which bought the bonds from north European banks to help them, not Greecewhen the ECB is in the process of creating €1 trillion of new money? It is clearly absurd.”

“So why don’t we just park the bonds on the books of the ECB. What I am not going to do is borrow yet more money from my colleagues in Italy, France or Slovakia, or wherever,” he said.

He may be inexperienced and a newbie, but he’s not stupid. He knows the game. And apparently he’s not afraid to tell it like it is and propose simple answers to what the big bad bankers pretend are intractable problems that the Greeks and the rest of Europe’s plebeians have allegedly brought upon themselves.

The world of banking is nothing but over-glorified accounting, where every problem and its solution is found in numbers and ledgers – or legal instruments.

[Varoufakis,] the emerging rock-star of Europe’s anti-austerity uprising, said the European Central Bank is straying into murky waters by openly stating that it may cease to act as lender-of-last resort for the Greek financial system.

“These threats are perfectly illegitimate. They are trying to asphyxiate us with arbitrary deadlines,” he told The Telegraph during a lightning tour of EU capitals to drum up support.

Note his choice of words. Murky waters are where dangers lie for everyone involved, most notably, in Greek mythology, for those who appear invincible. No one knows this better than the high priests of finance who know very well that appearances are everything and that reality, as proposed by Varoufakis, will be their undoing. But he’s not giving them an attractive choice,  and he knows it. They’re damned if they do and damned if they don’t go along with his plan. If they concede, every country on earth will follow in their footsteps, and if they refuse, well the euro is finished, followed shortly by the EU and who knows what next.

Even the Swiss are beginning to hedge their bets and break out Plan B for just such fiscal emergencies. Krugman was right to call this a game of chicken, wherein he hopes that “[ECB] takes a stand and declares that its proper role is to do all it can to safeguard Europe’s economy and democratic institutions — not to act as Germany’s debt collector.”

Because a game of chicken without at least one rational player never ends well. Will the ECB fold its cards and play a more sane game of reality, or will Greece walk away and leave austerity on a decaying EU table? In this case, my bet is that the Greeks are not the ones bluffing this time.

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